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Illustration: Sarah Grillo/Axios

Ten years ago, hubristic Wall Street geniuses came this close to destroying the global economy, saved largely by the Fed feeding trillions of dollars into banks in the U.S. and around the world.

Why it matters: This time, unlike in 2008 and 2009, it may be that no one comes to the rescue, given new U.S.-China tensions, frayed trans-Atlantic relations, and Trump Administration hostility to multi-lateral actions.

The 2008 financial crisis is not really over: Even as the U.S. stock market bull run made history today, the crash continues to reverberate in the form of still-recovering economies and massive global distrust in institutions.

  • The memory and residue of the crash are primary reasons why economists and policymakers are on the lookout for the next big financial crisis.
  • If a new crisis is brewing, it's in emerging markets, says Adam Tooze, a Columbia university professor and author of Crashed, a history of the 2008 financial crisis. Emerging economy stock markets are already down about 10% this year in aggregate.

The background: The financial crisis was triggered by U.S. mortgage defaults, which exposed the folly of trillions of dollars in exotic financial instruments packaged, sold and resold to investors and banks around the world. But even banks with no mortgage exposure ended up in trouble when global interbank lending dried up.

  • What makes the story chilling and gives it continued relevance is the degree to which global banking was and continues to be hugely intermeshed — and how it relies to even a greater degree on the U.S. and the dollar.

I caught up with Tooze by phone on his U.K. book tour. The new problem is China, which just by 2015 had borrowed $1.7 trillion in foreign currency, mostly in dollars, to finance its investments.

Tooze called China "the hub of a complex of emerging market economies," with connected manufacturing and other supply lines, commodity and product sales, and countless other businesses relying on the yuan.

  • A big danger is movements in the yuan, he said. "One of the nightmares is that China would allow its currency to move dramatically and bring down all of the emerging markets," he said.
  • Emerging market economies, he said, do not have the same cash reserves as China to tide them through a devaluation crisis, he said.
  • Already, the yuan has devalued by about 10% against the dollar this year. "We are probably testing the limits and the world is watching anxiously," he said.

Go deeper

Wall Street wonders how bad it has to get

Illustration: Aïda Amer/Axios

Wall Street is working out how bad the economy will have to get for Congress to feel motivated to move on economic support.

Why it matters: A pre-Thanksgiving data dump showed more evidence of a floundering economic recovery. But the slow drip of crumbling economic data may not be enough to push Washington past a gridlock to halt the economic backslide.

1 hour ago - Health

Moderna to file for FDA emergency use authorization for COVID-19 vaccine

Photo illustration by STR/NurPhoto via Getty Images

Moderna announced that it plans to file with the FDA Monday for an emergency use authorization for its coronavirus vaccine, which the company said has an efficacy rate of 94.1%.

Why it matters: Moderna will become the second company to file for a vaccine EUA after Pfizer did the same earlier this month, potentially paving the way for the U.S. to have two COVID-19 vaccines in distribution by the end of the year. The company said its vaccine has a 100% efficacy rate against severe COVID cases.

The social media addiction bubble

Illustration: Annelise Capossela/Axios

Right now, everyone from Senate leaders to the makers of Netflix's popular "Social Dilemma" is promoting the idea that Facebook is addictive.

Yes, but: Human beings have raised fears about the addictive nature of every new media technology since the 18th century brought us the novel, yet the species has always seemed to recover its balance once the initial infatuation wears off.